NJ To Receive A $22.1 Million Share Of Global Settlement With Drugmaker Global Resolution GlaxoSmithKline

TRENTON – New Jersey will receive a total of $22.1 million as the result of its participation in a global settlement with GlaxoSmithKline (GSK) that resolves allegations the company engaged in off-label marketing of certain drugs, underpaid on rebates it owed to state Medicaid programs and touted its diabetes drug, Avandia, as having certain health benefits despite a lack of adequate scientific supporting evidence, Attorney General Jeffrey S. Chiesa announced today.

According to Acting Insurance Fraud Prosecutor Ronald Chillemi, New Jersey, along with various other states and the federal government, has reached an agreement in principle with GSK that represents the largest healthcare fraud settlement in U.S. history.

Under terms of the settlement, GSK has agreed to pay a total of $3 billion to resolve allegations that it engaged in various unlawful practices related to the marketing and pricing of drugs it manufactures.

As part of the settlement, GSK will pay to the states and the federal government a total of $2 billion in damages and civil penalties to compensate various federal healthcare programs, including Medicaid, for harm allegedly suffered as a result of the illegal conduct. In addition, GSK has agreed to plead guilty to federal criminal charges relating to drug labeling and FDA reporting, and has agreed to pay a $1 billion criminal fine in connection with those allegations.

The participating states, and the federal government, alleged that GSK engaged in a pattern of unlawfully marketing certain drugs for uses for which the drugs were not approved by the Food and Drug Administration (FDA).

It was also alleged that GSK made false representations regarding the safety and efficacy of certain drugs, offered kickbacks to medical professionals and underpaid rebates owed to government programs for various drugs paid for by Medicaid and other federally-funded healthcare programs. Specifically, GSK allegedly engaged in the following activities:

Marketed the depression drug Paxil for off-label uses, such as use by children and adolescents.

Marketed the depression drug Wellbutrin for off-label uses, such as for weight loss and treatment of sexual dysfunction, and at higher-than-approved dosages.

Marketed the asthma drug Advair for off-label uses, including first-line use for asthma.

Marketed the seizure medication Lamictal for off-label uses, including bipolar disorder, neuropathic pain, and various other psychiatric conditions.

As part of the settlement, GSK has also agreed to plead guilty to criminal charges that it violated the federal Food, Drug, and Cosmetic Act (FDCA) in connection with certain activities. The government alleges that GSK introduced Wellbutrin and Paxil into interstate commerce when the drugs were misbranded, meaning containing labels that were not in accordance with their FDA approvals, and that GSK failed to report certain clinical data regarding Avandia to the FDA.

The settlement is based on four actions brought by private individuals pursuant to state and federal false claims acts and filed in, or transferred, to the United States District Court for the District of Massachusetts, as well as investigations conducted by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Frauds Division of the U.S. Department of Justice.